Why Transatlantic Free Trade Is a Mistake for Canada and the United States

The United States and European Union have taken the free trade plunge.

President Obama announced in February that he will start talks with the EU on a transatlantic trade, investment, and regulatory pact. Last week, the European Commission sent a draft secret mandate to member states on how far they're willing to go to clinch it. And the usual business lobbies have already begun to celebrate what they hope to be an important (for them) leap forward for corporate globalization.

The Mexican government is allegedly seeking a spot in the transatlantic talks with speculation Canada may join. But for all three NAFTA countries the pact would be a mistake, as Canadians are learning too late.

The groundwork for a U.S.-EU free trade zone can already be found in the four-year-old Canada-EU Comprehensive Economic and Trade Agreement (CETA) negotiations. Like that other big trade deal, the Trans-Pacific Partnership, the CETA hopes to eliminate about 98 per cent of tariffs on most products. But the broader goal is to reduce so-called non-tariff barriers in the form of domestic regulations, public services, government procurement, performance requirements on investment, and intellectual property rights.

In some areas, like public interest regulation, Europe has more to lose from transatlantic free trade than either the U.S. or Canada. Labelling schemes or outright bans on genetically modified organisms, stricter chemicals management policies, and an EU Fuel Quality Directive that will block Canadian exports of carbon-intensive tar sands oil are all targets for deregulation.

U.S. states and municipal governments should be concerned about Europe's desire to export its procurement model to North America. In the CETA negotiations, Canadian provinces and municipalities have been asked to give up their right to buy locally (or buy Canadian) on public infrastructure projects and large goods or services purchases. Leaked documents suggest they will make this sacrifice in exchange for modest market access gains for Canadian meat products in Europe. Hardly a fair deal for local governments.

The EU investment protection model may also surprise some U.S. observers in how far it goes to protect the profits of foreign multinationals. Since signing NAFTA, Canada and the U.S. have re-written their model investment treaties to try to create more space for legitimate public regulations and policies. It's debatable whether the reforms are much of an improvement. But an EU deal could wipe out what little policy space they created.

The EU is pushing Canada for far more pro-investor definitions of "fair and equitable treatment" and "standards of treatment." This will expand opportunities for European firms to challenge non-discriminatory public policies that lower profit margins, even if the objective of the policy is to conserve natural resources, to protect the environment or public health, or for other legitimate purposes. This at a time when Canada is facing about $2.5 billion in NAFTA investor claims from U.S. firms, including one dispute by a U.S. energy company against a moratorium on hydraulic fracturing (or fracking) in Quebec.

U.S. firms frequently use bilateral investment treaties to challenge foreign government measures. But it is likely that Congressional support for these extreme investor rights treaties would vanish if the U.S. were to lose a case at home. A Transatlantic Trade and Investment Partnership agreement (TTIP) that includes an investor protection chapter like the one in the CETA will present far too many opportunities for powerful European multinationals to test that theory.

There are other problems to consider in a U.S.-EU pact. For example, the two largest exporters of brand name drugs could restrict access to cheap medicines globally if intellectual property rights are ramped up for patented pharmaceuticals. Global food security could be equally damaged if agricultural products received the same enhanced protection in the TTIP. The world's poor cannot afford to pay more for drugs, seeds, or fertilizer.

The voices of those most impacted by these deals, however, are generally not heard in trade negotiations, which happen behind closed doors with no meaningful public participation. The Canada-EU free trade talks are off limits even to Canadian parliamentarians. Still, opposition to the CETA is growing across the country.

More than 80 Canadian municipalities have passed motions expressing concerns about the deal, with half of those asking to be excluded entirely. Provincial governments are wary of intellectual property rules that will increase the cost of public and private drug plans they administer.

Like the CETA, a U.S.-EU trade deal will not be about jobs or sustainable development. It will not look anything like a 21st century trade deal should. The TTIP will be about deregulating and disempowering communities to act in the public interest.

Maude Barlow is the National Chairperson of the Council of Canadians and chairs the board of Washington-based Food and Water Watch.

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The 10 Best Countries To Do Business

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See where Canada falls in the Forbes rankings of the best countries in the world in which to do business.

The world's largest economy just snuck into the top 10 on Forbes' list of best countries for business. The magazine cited the nation's heavy tax burden as one of the reasons why it did not place higher. (Photo by Spencer Platt/Getty Images)

A historic leader in global trade and finance, the United Kingdom placed a strong 9th place. (Photo by Tom Shaw/Getty Images)

Oil boosts the economy of this Scandinavian powerhouse. (Photo by Scott Barbour/Getty Images)

A key global shipping hub, Singapore, is one of the best places in Asia to do business. (Roslan Rahman/AFP/Getty Images)

The third Scandinavian country on the list, Denmark fell from the top spot on Forbes' ranking. (Getty Images)

Despite being hit hard by the recent economic crisis, Ireland placed a respectable fourth on the list. (Peter Macdiarmid/Getty Images)

Home to the iconic Hang Seng index, Hong Kong's exposure to China and reliable institutions make it one of the world's best places for business. (Ed Jones/AFP/Getty Images)

Punching above its weight is the southern nation of New Zealand. The country only has fewer than 4.5 million people but its the runner-up on Forbes' list. (Photo by Sandra Mu/Getty Images)

The CN Tower looms over the Toronto Blue Jays and Detroit Tigers as the Rogers Centre's roof is open for the first time in the 2011 MLB baseball season in Toronto Saturday, May 7, 2011. (AP Photo/The Canadian Press, Darren Calabrese)